EasyLink Sued by Investor Over $310 Million Open Text Offer

May 9 (Bloomberg) -- EasyLink Services International Corp.,
a provider of cloud-based business messaging and transaction
services, was sued by a shareholder claiming Open Text Corp.’s
$310 million takeover offer undervalues the company.

EasyLink shareholder Yechiel E. Gross sued the Norcross,
Georgia-based company and executives, arguing that the proposed
transaction shortchanges investors and is the result of a
“flawed process,” according to a complaint filed yesterday in
Chancery Court in Wilmington, Delaware. Gross seeks to represent
shareholders as a group.

EasyLink executives “did not take all steps necessary to
obtain a full, fair and adequate price for EasyLink’s shares,”
lawyers for Gross said in court filings. The deal doesn’t
account for “the intrinsic value” of EasyLink’s stock which,
due to the company’s growth prospects is “materially in excess
of the amount offered.”

Open Text, the world’s largest independent provider of
enterprise content management software, offered to buy EasyLink
for $7.25 a share, according to a May 1 statement announcing the
buyout, issued just minutes after the close of the day’s trading
session.

The Waterloo, Ontario-based company’s offer represents a 14
percent premium to the EasyLink’s May 1 close of $6.36, and is
23 percent more than the April 30 closing share price of $5.90.

EasyLink fell a half-cent to $7.15 at 3:04 p.m. New York
time in Nasdaq Stock Market trading today. Open Text fell
cents, or 1 percent, to $49.99 in Nasdaq trading.

‘Without Merit’

“Obviously we believe the suits are without merit and we
intend to vigorously defend ourselves,” said Glen Shipley,
EasyLink’s chief financial officer, in a telephone interview
today.

Gross argues that management negotiated a deal that
unfairly favors Open Text and will “unreasonably dissuade
potential suitors from making competing offers.” Under the
terms of the proposed transaction EasyLink is restricted from
seeking other offers and would have to pay a $9.4 million break-up fee if the deal is terminated, according to court documents.